DCCC Chair Short on Specifics for Medicare Reform

Michael Warren

June 1, 2011 3:49 PM

Rep. Steve Israel (D-N.Y.), chairman of the Democratic Congressional Campaign Committee, said that Medicare reform would be a “defining issue” for his party’s plan to win back control of the House of Representatives next year. Speaking with reporters this morning, Israel said that the House Republicans’ approach to reforming the senior health care entitlement program shows the difference between the Democrats and the GOP. But he failed to offer specifics of the Democrats’ own Medicare plan.

“It’s just about choices. It’s about priorities,” Israel said. “We Democrats have said consistently we are willing to negotiate improving Medicare, strengthening Medicare, reforming Medicare. We will not negotiate an end to Medicare.” Asked about a specific proposal, he demurred, saying he wants to “sit at the table” and discuss solutions.

“Let’s talk about authorizing the secretary of Health and Human Services to negotiate for volume discounts of pharmaceuticals, just in the same way the secretary of Veterans’ Affairs is authorized to negotiate for volume discounts on pharmaceuticals,” Israel suggested, though he did not offer any other specific ideas.

Israel said that Medicare as it currently operates allows seniors to go to their doctor when they are sick, while the federal government picks up the tab. On the other hand, he said, the House GOP plan, authored by Budget chairman Paul Ryan (R-Wisc.), increases costs for seniors. “Under this plan, if you’re a senior citizen and you get sick, you get a voucher, you go to your insurance company,” Israel said.

That’s not entirely accurate, however. Under the Ryan plan, seniors will have a choice of approved insurance plans, the premiums for which Medicare will then pay. (Ryan calls this premium support.) Approved plans must be willing to provide the same coverage for all Medicare recipients and won’t be allowed to deny coverage based on preexisting conditions. That’s all different from a voucher program, which would simply give seniors a set amount of money to find an insurance plan in an open market.

Israel admitted that the “status quo” for Medicare is not sustainable, and he said that in addition to cost-cutting measures, Democrats want to find ways to “broaden” the revenue base. “We ought to take a look at broadening revenues, and that includes reducing subsidies to the big oil companies and asking people earning over a million dollars…to revert back to the Clinton era tax rates,” Israel said. “That’s how you get revenues that you can then apply to the programs you need to make sure that elderly people get medical care.”

According to numbers that Democrats like Sen. Al Franken cite, reducing oil company subsidies would result in an additional $21 billion in revenue over the next ten years. The term “subsidy” is a little misleading, too, since Democrats are referring to tax provisions that are available to nearly all corporations.

But $21 billion over 10 years is only a very small fraction of the total costs for Medicare, which according to the Medicare Trustees' report was over $5 trillion in 2010 and is expected to increase exponentially in the coming years.

Repealing tax cuts for the wealthiest of Americans would currently amount to less than one percent of GDP, a miniscule amount when compared to how much spending on Medicare alone is going to increase. So does part of the Democrats' plan to "broaden revenue" also include middle class tax hikes, if not structural reform to entitlement programs? Israel did not say one way or the other.